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Itaipu receives rating Baa2 from Moody’s agency
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02/07/2014

The international risk rating agency Moody's assigned  Baa2 issuer rating, in local and foreign currency, to Itaipu Binational, with a stable outlook. The statement on classification was released last Friday (27), on the agency’s website. According to Moody's, “the rating reflects the strong level of competitiveness of the company and its stable and predictable cash flow."

This is the first time that Itaipu is an international rating. Until then, the company was valued only by the Brazil National Scale Standard & Poors - achieving brAAA stable rating.

To get to the Moody's index, which positions Itaipu in an average investment grade, Binational’s financial data, and Brazilian, Paraguayan and international energy market were evaluated. According to the agency the stable outlook reflects the expectation that Itaipu keeps providing stable cash flow over the medium term.

The predictability provided by Itaipu Treaty, signed by the federal government of Brazil and the Republic of Paraguay in 1973, is an important factor to ensure the positive rating. "The Moody's report makes clear that the Treaty was decisive, being a firm and stable commitment," said the executive financial director of Itaipu, Margaret Groff.

"The size of the company and the rating of the Brazilian government, stable Baa2 , also helped to establish the image of solidity and trust that Itaipu has in the international financial market," added the director.

Moody's also emphasized the important role of IItaipu on the international market and the record in energy production. "Itaipu stands out clearly from international standards as a producer of electricity with excellent performance and stable generation levels for several years," the statement said.

Commitment

For the Coordinator of financial management of Itaipu, Covelo Luiz Rossi, the rating is a joy and commitment. "It's great to receive a seal of quality of our management, but we have to keep doing our part to keep the Itaipu among the best," he said.

The construction debt, considered high, and possible political interference in the company management impedes a higher rating. Still, Moody's expectation is that the rating will remain stable for the next years, unless the Brazilians ratings are downgraded or that a major change in tariffs reduce the cash flow of Itaipu.

The main methodology used for rating was the "Non-Regulated Utilities and Energy Companies", published in August 2009.